RBI extended Time for opening up of New Banks by Six Months

The RBI (Reserve Bank of India) on 3 June 2013 released certain clarifications on the guidelines issued for licensing of new banks. Based on the feedback received from the interested entities, the RBI increased the validity period of the in-principle approval of setting up of banks from one year to 18 months. RBI stated that intending applicants have brought out several complex issues pertaining to reorganization of the existing corporate structure, restructuring of businesses and meeting the regulatory requirements.

Once the in-principle approval is given by the RBI for setting up of a bank, the promoter group has to set up a non-operative financial holding company (NOFHC) and the bank within 18 months from the date of in-principle approval. The bank has to start banking business within this period after getting the banking licence.

The RBI had released the Guidelines for Licensing of New Banks in the Private Sector in February 2013. Accordingly, the RBI had stated that corporates and public sector entities with sound credentials, 500 crore rupees capital and a minimum track record of 10 years would be allowed to enter the banking business. The last date to submit applications is the 1 July 2013. The RBI had also invited queries from intending applicants seeking clarifications on guidelines.